Sirtex Medical goodbyes Varian, backs $1.9b Chinese offer from CDH

Sirtex Medical’s board has announced it is backing China's CDH Investments' $1.9 billion bid for the medical device maker, which it thinks will help it manoeuvre into the potentially lucrative Chinese market.

Until Thursday afternoon, a lower bid of $28 a share from US-based Varian Medical System’s had received Sirtex board's backing.

Sirtex Medical's board decided that the higher but more complicated offer from the Chinese private equity firm of $33.60 is the better deal.

Photo: Michele Mossop

But the board has now decided that the higher but more complicated offer from the Chinese private equity firm of $33.60 is the better deal.

CDH has about $US20 billion of assets under management. It was established in 2002 and its portfolio includes companies in China, Asia and globally.

The last-minute Chinese offer had surprised the board and market, coming just one day before a scheme meeting scheduled to approve May's takeover offer by Varian.

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Varian has previously said it would not increase its takeover offer for the target liver cancer treatment provider.

CDH Investments chief executive Jiao Shuge said he was excited by the opportunity to acquire Sirtex and to work with its Australian management team to grow the business and realise the full potential of its cancer treatments.

“CDH is committed to Sirtex’s existing operations in the US, Europe, Asia and Australia," he said.

"While China is an obvious opportunity, given it is where more than half of the world’s liver cancer incidences occur, we also plan significant investments to accelerate the company’s growth in countries where it does not currently have a meaningful presence.”

While liver cancer is a leading cause of death in China, the effectiveness of prevailing treatments is limited, CDH said, and Chinese patients have fewer treatment options than those in developed countries.

CDH was already recognised as a leading healthcare investor in China and had helped many of its healthcare portfolio companies achieve high growth in the region, including investments in CGP, Luye, Kanghui, DaShenLin Pharmaceutical and SciClone.

The CDH-CGP Scheme is fully funded with all equity and debt secured, but is subject to several conditions.